OCC to cut number of examiners at big banks

RyanTracy

Reuters

A key U.S. regulator is rethinking its approach to banking supervision by cutting back on a longtime symbol of Washington oversight: The resident examiner.

The largest U.S. banks will have fewer supervisors stationed in their offices over time under a move announced Wednesday by the Office of the Comptroller of the Currency, which has teams inside the commercial banking units of Wells Fargo & Co.
WFC, -0.45%
, J.P. Morgan Chase & Co.
JPM, -0.34%
, Bank of America Corp.
BAC, -0.45%
, Citigroup, Inc.
C, -0.10%
and other big firms.

The OCC said the cutback was part of an effort to give its supervisors a broader perspective on risks that may be building across the financial system. Each bank will still have the same number of examiners watching over it, but fewer of those people will have permanent offices inside banks, the agency said.

The move is part of a broad rethink by Washington about how best to spot risky financial activities before they create large-scale problems. Regulators faced criticism during and after the 2008 financial crisis for failing to detect budding risks, with the OCC facing particular heat for failing to mitigate J.P. Morgan’s $6 billion “London Whale” trading losses in 2012.

Comptroller Thomas Curry, who took the reins at the OCC in March 2012, asked external experts to review the agency’s examination program and recommend changes. In a report last year those experts--which included regulators from other countries--suggested the large number of on-site examiners hindered the OCC’s ability to spot risky activities building in multiple institutions at once and suggested the agency scale back its program.

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